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Unless you’ve been hiding beneath a rock then you are probably aware of the news that Microsoft has offered $46 Billion to buy Yahoo! When I first heard this news I thought I couldn’t help but feel that in many ways it was an admission that as things stand it really cant compete with Google. Yahoo has certainly been struggling lately and current trends seem to suggest that this situation doesn’t look like it’s going to improve any time soon, particularly since Yahoo! revenue, like Google, is advertising driven and it’s pretty obvious who is winning that contest.

Since the announcement of the offer was made on the 1st of February many people have been waiting to see how Google would react. Well today David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer responded on the Official Google Blog, in a post interestingly entitled “Yahoo! and the future of the internet“. The post is full of some unusually aggressive statements (by Google’ standards) about this potential acquisition:

…This is about more than simply a financial transaction, one company taking over another … It’s about preserving the underlying principles of the Internet: openness and innovation. Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies — and then leverage its dominance into new, adjacent markets…Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ email, IM, and web-based services?

Sounds like interesting times ahead. I personally struggle with the notion of Yahoo! selling up to Microsoft. Yahoo! has far more in common with Google than it does with Microsoft. On the internet Microsoft has never really succeeded even after acquiring successful properties like hotmail, because they could never really figure out what to do with them. I think it’s partly because Microsoft doesn’t really come across as a consumer oriented entity, it’s more of an enterprise oriented company. I still think they are very much entrenched in the “how much can I charge you for a license to use X” world and never really sought to look beyond that for other options until it was too late and the barbarian( Google) wasn’t just at the gate it had plowed right through it.

I personally dread to think of what might happen if Microsoft got their hands on a service like flickr and here’s why …

I remember when Yahoo! first acquired flickr 2005, the user base complained fearing Yahoo! would somehow destroy their beloved flickr. We know that didn’t happen and Yahoo! invested in not only improving the service but also succeeded in growing it into one of the most popular social sites on the internet. So if that worked out ok why wouldn’t the same thing happen again if Microsoft was at the helms. I’m going to go out on a limb here and suggest it’s because Yahoo! gets the internet. If there’s one thing Microsoft has proven over the last few years it’s that it definitely doesn’t get the internet. Or another way of looking at it is this … if Microsoft bought Yahoo! would it allow flickr to continue to run under the same ethos and principles it was founded on?

Maybe Drummond is right? maybe this isn’t just about a transaction, maybe it is about preserving the underlying principles of the Internet: openness and innovation.